Beijing is benefiting vastly from its commercial ties with Nairobi while the latter remains in a losing trade position.
In about two decades, the trade deficit with China has become the largest, with Kenya exporting goods worth a mere Sh15 billion to the world’s second-largest economy.
Exports to China are reportedly low because of stringent measures imposed by Beijing.
The government needs to take action to slow down the huge trade deficit Kenya has with China. As things stand, Beijing is benefiting vastly from its commercial ties with Nairobi while the latter remains in a losing trade position.
Last year, imports from China consumed Sh60 out of every Sh100 that Kenya earned from exports. When debt repayments to China are added, the outflows rise to Sh74 for each Sh100 Kenya receives from exports of commodities such as flowers and tea.
In about two decades, the trade deficit with China has become the largest, with Kenya exporting goods worth a mere Sh15 billion to the world’s second-largest economy.
This is unacceptable. Though Kenya relies heavily on export of relatively low-value primary goods led by agricultural produce, there is no reason why China cannot buy more of these just like other developed markets.
Exports to China are reportedly low because of stringent measures imposed by Beijing.
These include, for instance, a requirement to freeze avocados before export in order to control the fruit fly pest. It is time Kenyan authorities got more aggressive in their trade negotiations with China.
It is not a big ask for Beijing to ramp up its exports from the local market, starting with agricultural goods and other raw materials.
Taking in goods worth even Sh100 billion per annum will cost China little but will benefit Kenya significantly.
Aiming to lower the deficit with Beijing should be a priority for policymakers and diplomats.
It should be noted that China is benefiting on two fronts in its dealings with Kenya and unless we can extract more economic value from the Asian country, the trade deficit will only worsen going forward.
Besides supplying us with low- and high-value manufactured products, China has also entrenched its position as the top contractor of major public and private infrastructure, including roads and commercial buildings.
One of the aims of globalisation is to foster mutual benefits from increased trade among countries. For Kenya and China, the scales are tilted disproportionately to the latter’s advantage. It is time to take steps to rebalance them.
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